U.S. President Donald Trump recently shook up global financial markets by announcing plans to enact import tariffs of 25% on steel and 10% on aluminum. The exact form these tariffs will take remains unclear. We've updated our forecasts and fair value estimates based on the expectation of a targeted approach. A blanket tariff covering all imports would be far more severe and, in turn, far more beneficial to U.S. steel and aluminum producers. The consequences for U.S. metal users, while significant in aggregate, are far more diffuse, touching industries from aerospace to aluminum cans. Accordingly, our long-term forecasts and fair value estimates for these companies aren't meaningfully affected. Harmful second-order effects, including retaliation by U.S. trade partners, are possible, but we have not assumed major moves in our base-case forecasts. Perhaps the most damaging of potential reactions would be cancellation of significant Boeing(BA) aircraft orders by Chinese customers.

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